Last month I wrote how I happily exited my position in Asta Funding around $12.50/share while the company was planning to go private at $11.47/share because I was skeptical that RBF Capital’s attempt to extract a higher price would be successful. Apparently their 8.8% position provided enough negotiation leverage, and the merger agreement was amended yesterday to a price of $13.10/share, marginally higher than the $13/share offer of RBF Capital itself. As part of the deal RBF has entered a voting agreement to vote all its shares in favor of the merger. At this point I think the deal is basically a done deal, and I would expect shares to trade close to the $13.10 price. And if not, Asta Funding would remain an attractive merger arbitrage candidate.
Thanks to a stroke of luck I bought back my position last week already when a large seller showed up, but otherwise I think I would still have been reasonable happy with my decision to sell early at $12.50. The new offer is basically the best case scenario that is playing out, and the missed upside would have been just a couple of percentage points.
Author is long Asta Funding